STATEMENT OF FACTS

Juan Dela Cruz, 35 years old, is a Filipino resident of Baguio City. He has been
employed by BPO Center, Inc., for the past four (4) years. He was occupying a
supervisory position with a monthly salary of Php 50,000.00. BPO Center, Inc.
is a corporation organized under Philippine laws with a principal business
located at Loakan, Baguio City

On February 10, 2017, he was called to the Office of the Manager because the
results of his annual medical exam showed that he has AIDS (or Acquired
Immune Deficiency Syndrome). Consequently, he was asked to explain in
writing, within five (5) days, to explain his failure to disclose the matter to them.
He was also asked to further explain why he should not be terminated based on
the ground of loss of trust and confidence under the Labor Code of the
Philippines.

On February 14, 2017, he gave his explanation letter that he had only learned
that he had AIDS after his executive check-up in March 2016; that he had
noticed no manifestations prior to March 2016; and that he has been taking
medications and in constant communication with his doctor. He did not disclose
his health condition since it did not affect his ability to act as supervisor of virtual
assistants. He neither violated any company policy nor the provisions of his
contract.

On the following day, February 15, 2017, the Human Resource Manager gave
Dela Cruz a notice of dismissal, effective immediately, stating that his dismissal
was not due to his condition but to his deliberate concealment of the same.
Dela Cruz will be considered retired, thus entitled to all benefits under the
Company Manual which provides that “an employee who has attained the age
of 60 or has worked for five (5) years for the company shall be entitled to a
retirement pay equivalent to one half month of salary for every year of service.”

On the same day, Dela Cruz received his payslip which showed that his payroll
account was debited with Php 101,250.00.

On February 20, 2017, he returned to his office but his magnetic ID could no
longer work and his things were no longer in his cubicle. He was forced to leave
the premises of the company without any of his personal belongings.
The termination of Juan Dela Cruz was based on the ground of loss of trust and
confidence because of his deliberate concealment of his health condition.

Under Article 282 (c) of the Labor Code, one of the grounds for termination of
employment is fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative.

It is settled that the breach of trust must be willful. It is done intentionally and
knowingly without any justifiable reason. Therefore, ordinary breach will not
suffice.

There was neither fraud nor willful breach committed by Dela Cruz. He was
under no obligation to disclose his condition to his employer because the same
has no relative relation to the discharge of his duties as a supervisor.

The dismissal of an employee for lack of trust and confidence must be based on
substantial evidence and not on the employer’s whims or caprices or
suspicions; otherwise, the employee would eternally remain at the mercy of the
employer. Loss of confidence must not be indiscriminately used as a shield by
the employer against a claim that the dismissal of an employee was arbitrary.
And, in order to constitute a just cause for dismissal, the act complained of must
be work-related and shows that the employee concerned is unfit to continue
working for the employer. In addition, loss of confidence as a just cause for
termination of employment is premised on the fact that the employee
concerned holds a position of responsibility, trust and confidence or that the
employee concerned is entrusted with confidence with respect to delicate
matters such as the handling or care and protection of the property and assets
of the employer (Qurico Lopez v. Alturas Group of Companies, G.R. No.
191008, April 11, 2011).

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The employer is allowed to terminate the services of the employee provided

that substantive and procedural due processes are observed.

Pursuant to the constitutional right to security of tenure, the employer cannot

terminate the services of a regular employee except for: (a) just cause; (b)
authorized cause; or (c) in case of probationary employees, when he fails to
qualify as a regular employee.

Under Article 293 (formerly Article 279) of the Labor Code,28 an employer shall
not terminate the services of an employee except only for a just or authorized
cause. A dismissal not anchored on a just or authorized cause is considered
illegal and it entitles the employee to reinstatement or in certain instances,
separation pay in lieu thereof, as well as the payment of backwages. (Alvarez v.
Golden Tri Bloc, G.R. No. 202158, September 25, 2013)

The complained act must be work related such as would show the employee
concerned to be unfit to continue working for the employer and it must be based
on a willful breach of trust and founded on clearly established facts.32 The
basis for the dismissal must be clearly and convincingly established but proof
beyond reasonable doubt is not necessary. (Alvarez v. Golden Tri Bloc, G.R.
No. 202158, September 25, 2013)

To validly terminate an employee based on an authorized cause, the employer

has to comply with the following: (a) the employer is required to send a 30-day
prior written notice before the intended date thereof to the employee/s and the
DOLE; and (b) the employer has to pay the employee a separation pay which
amount will vary depending on the ground.

In the case at bar, BPO Center, Inc. did not send a 30-day prior written notice
to Dela Cruz. Only a day after he sent his explanation letter

Causes for Termination by the Employer

1. Serious misconduct;
2. Willful disobedience of employer’s lawful orders connected with work;
3. Gross and habitual neglect of duty;
4. Fraud or breach of trust;
5. Commission of a crime or offense against the employer, employer’s family, or
representative; and
6. Other analogous causes.

** Just causes are blameworthy acts on the part of the employee such as serious misconduct,
willful disobedience, gross and habitual neglect of duties, fraud or willful breach of trust,
commission of a crime and other analogous causes (Art. 282, Labor Code).
 1. Serious insult by the employer or his or her representative on the honor and person of the
employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his or her
representative;
3. Commission of a crime by the employer or his or her representative against the person of
the employee or any of the immediate members of his or her family; and
4. Other analogous causes.

** Authorized causes are of two types – business reasons and disease. The business reasons are
installation of labor-saving devices, redundancy, retrenchment and closure or cessation of
operation (Art. 283, Labor Code). Before the employer can terminate employment on the ground
of disease, he must obtain from a competent public health authority a certification that the
employee’s disease is of such a nature and at such a stage that it can no longer be cured within a
period of six months even with medical attention (Art. 284, Labor Code; Implementing Rules of
Book VI, Labor Code).

1. Installation of labor-saving devices;

2. Redundancy;
3. Retrenchment to prevent losses;
4. Closure or cessation of business; and
5. Disease not curable within six months as certified by competent public authority, and
continued employment of the employee is prejudicial to his or her health or to the health of
his or her co-employees.

** A termination for an authorized cause requires payment of separation pay. When the
termination of employment is declared illegal, reinstatement and full backwages are mandated
under Art. 279 of the Labor Code. If reinstatement is no longer possible where the dismissal was
unjust, separation pay may be granted.

** Procedurally, (1) if the dismissal is based on a just cause under Art. 282 of the Labor Code, the
employer must give the employee two written notices and a hearing or opportunity to be heard
before terminating the employment, that is, a notice specifying the grounds for which dismissal is
sought and, after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if
the dismissal is based on authorized causes under Arts. 283 and 284 of the Labor Code, the
employer must give the employee and the Department of Labour and Employment written notices
30 days prior to the effectivity of the separation.

** If the termination is due to retrenchment to prevent losses, or closure or cessation of operation

of the establishment not due to serious business losses, or due to disease, the separation pay is
one-half month’s pay for every year of service or one month pay, whichever is higher (Arts. 283
and 284, Labor Code).

Procedural Due Process

To comply with the procedural due process, the employer has to follow the rule on twin notice (1 st and
2nd notice) and hearing (or the opportunity to be heard) in disciplinary actions. This is the twin notice
and hearing rule.[16]

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Insights: In some states in the U.S. where employment is at-will, it is a practice that the terminated
employee is given a pink slip which serves as a notice of dismissal. In the Philippines, there is no such
pink slip practice as the twin notice and hearing rule has to be complied.

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Step 1: The 1st Written Notice. The 1st Notice must be written specifying the grounds for termination,
as well as giving the employee reasonable opportunity within which to explain his side.[17] The
reasonable opportunity may be through an administrative hearing or a written explanation within five
days from receipt.[18]

Preferably, the 1st Notice must be personally served to the employee with a receiving copy signed and
kept by the management, as well as a notarized affidavit of service executed by the one who delivered
it. If personal service is impracticable, the notice should be sent via registered mail with return card and
by private courier to the employee’s last known address made known to the employer.

Step 2: Hearing or Opportunity to be Heard. The reasonable opportunity to be heard may be through
an administrative hearing or by way of a written explanation. If a hearing is scheduled, the employee may
be assisted with legal counsel and the former should be given opportunity to respond to the charge,
present his evidence, or rebut the evidence presented against him.

In case of a written explanation by the employee, the letter will suffice to comply with rule on
opportunity to be heard. In labor law, the essence of due process “lies simply in an opportunity to be
heard, and not that an actual hearing should always and indispensably be held.” Hence, despite the
absence of hearing or conference, the requirement of procedural due process is complied once the
employee has been given the opportunity to explain his side of the controversy.

Step 3: The 2nd Written Notice. After affording the employee an opportunity to explain, the employer
may proceed with its investigation and decide on the issue. If the result leads to imposing termination as
the appropriate penalty, the employer must serve the 2 nd Notice on the employee stating therein “that
upon due consideration of all the circumstances, grounds have been established to justify his
termination.”

As with the 1st Notice, the preferred mode of service is personal with affidavit of service; if
impracticable, registered mail with return card and private courier may be done

** An employer has a distinct prerogative and wider latitude of discretion in dismissing a managerial
personnel who performs functions which by their nature require the employer’s full trust and confidence.
As distinguished from a rank and file personnel, mere existence of a basis for believing that a managerial
employee has breached the trust of the employer justifies dismissal. Loss of confidence as a ground for
dismissal does not require proof beyond reasonable doubt as the law requires only that there be at least
some basis to justify it.